PRIVATE rents in Scotland have risen to record levels despite a Scottish Government rent freeze - while landlords have warned of a potential slump in building new homes.

New official estimates has revealed that private rental prices have leapt by 5.1% for the year to March - the highest rise since it started being tracked in 2012.

The experimental studies carried out by Office for National Statistics researchers found that rents have soared by over five times the rate registered in March, 2021 when the annual rise was just 1%.

Details of the record estimated rise have come despite the then First Minister Nicola Sturgeon announcing a rent freeze in September to beat the cost of living crisis.

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Any rent increase notice between September 6, last year and March 31, 2023 was seen as void.

This was replaced by a 3% rent cap for private tenancies only in April which is due to remain in place till September 30, 2023.

Ministers were accused of betraying the poorest in Scotland in the cost of living crisis by not extending the cap to those renting from social sector landlords such as councils and housing associations who tend to provide lower cost accommodation taken by the poorest and most vulnerable in the country.

There are estimated to be 2.6m homes in Scotland with nearly a quarter being social rented properties and 15% being leased privately.

The ONS said that the rise was discovered as a result of a study of both existing tenancies and new lets.

It comes as the Assessment of Scotland’s Rent Freeze and Impacts Report from The Scottish Property Federation and researchers Rettie & Co, says that the system of rent controls introduced under the Cost of Living (Tenant Protection) Act will disrupt the future supply of new homes for rent.

The Herald:

Of the investors interviewed with a combined £15 billion of Build-to-Rent (BrR) assets, nine judged Scotland to be unattractive, including four who view the country as un-investable under current conditions.

Investors are calling on the Scottish Government to incentivise investment in the BtR sector by creating a "stable policy environment that removes the risk of ongoing interventions in the market and reduces the risk premium".

One of the loopholes of the rent freeze was that there was no restriction on raising rents  for new lets.

The Scottish Tenants Organisation said that it showed that the rent freeze policy did not work and was "in tatters".

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And tenants campaign group Living Rent said it showed that the rent freeze and the subsequent rent cap did not go far enough to protect people.

They believe that loopholes in the rent freeze contributed to the rises.

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"Despite the rent freeze, tenants were still hit by rent hikes due to the freeze not applying to new tenancies or changes in joint tenancies. In some cases landlords [forced] tenants into accepting rent hikes," the group said.

"We need rent controls tied to the property not the tenancy to make homes affordable and ensure tenants are not living in fear of rent increases or eviction.”

Other situations where rents could be increased was where users had an assured tenancy with a rent rise process written into the contract.

It also did not apply to lodger agreements, where tenants live with their landlords.

Agricultural tenancies were also excluded.

An eviction ban also imposed in September was called a 'travesty" as it emerged nearly 700 tenants had faced court proceedings from private landlords to remove them from properties since it was introduced in September.

The Herald: Former leader of the Scottish National Party Nicola Sturgeon speaking to the media outside her home in Uddingston, Glasgow, after her husband, former chief executive of the SNP Peter Murrell, was “released without charge pending further

Ms Sturgeon announced plans for an eviction ban and an immediate rent freeze for social housing and private tenants while branding the cost of living crisis a "humanitarian emergency".

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Launching the support for tenants last year under the Programme for Government she said it "will aim to give people security about the roof over their heads...".

But there have been serious concerns over loopholes in the eviction ban and now the rent freeze brought in through the Cost of Living (Tenant Protection) (Scotland) Bill 2022.

Sean Clerkin, campaign co-ordinator for the STO said: "The rent freeze has been a failure with these rises. The Scottish Government has to look at this again and protect tenants from rises from landlords and close all loopholes."

Housing regulators forecast that rent arrears within the over 550,000 socially rented properties in Scotland are to peak in 2022/23 having hit £169.6m at the end of March, 2022, which amounts to 6.3% of the amounts due.

Aditi Jehangir, secretary of Living Rent said: "The cost of living crisis hasn’t gone away.

Every week we hear from members who have been hit with huge rent hikes due to the cap not applying to changes in joint tenancies. When one tenant leaves a tenancy, landlords hike up rents for the remaining tenants due to it being a new tenancy agreement. We need rent controls that are tied to the property not the tenancy so that landlords are not able to inflate rents between tenancies.

"Investors throw their toys out of the pram, saying that rent legislation is ruining their incentive to build new homes, but the rent cap does not apply to new tenancies."

A Scottish Government spokesperson said: “These experimental statistics are largely based on advertised rental prices – in other words, rents at the start of a tenancy - and as such do not take account of our emergency legislation, which has placed a cap on rent increases while a tenancy is ongoing. This has been acknowledged in the ONS publication, advising readers to bear this in mind when interpreting results for Scotland.

“The legislation is providing additional protections for tenants during these challenging and uncertain economic times, giving them stability in terms of their housing costs to help them stay in their homes.”